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The ashes here are still warm in San Diego, and some homeowners are looking ahead to rebuilding. That could be good news for the San Diego economy, which has been hit hard by the downturn in housing sales. Contractors and developers could benefit as nearly as 2,000 houses will have to be built.

NPR's John McChesney reports.

JOHN McCHESNEY: Lancashire Way runs along a hilltop in the Rancho Bernardo district of San Diego. Houses with pale rose stucco and red-tiled roofs line the street, or at least part of the street. Twenty-five of the fifty houses on Lancashire are now just heaps of ashes.

We found Khosro Motamedi standing in the great rubble while two friends helped him sift through the ashes with wire-meshed screens as a helicopter hovers overhead.

(Soundbite of helicopter)

Mr. KHOSRO MOTAMEDI (Engineer): They recovered the location of a whole bunch of coin collections. And…

McCHESNEY: It's like…

Mr. MOTAMEDI: …none of it…

McCHESNEY: …an archeological digging.

Mr. MOTAMEDI: Yeah, exactly. That's exactly what it's like. And we're getting better at it.

McCHESNEY: At Motamedi's feet, a small pile of blackened coins - some fused together by the heat. The only other recognizable artifact, a Persian rug miraculously unburned. Motamedi, an engineer, is an Iranian immigrant.

So are you going to rebuilt?

Mr. MOTAMEDI: Definitely.

McCHESNEY: Right here?

Yeah, I know what you're thinking.

(Soundbite of laughter)

Mr. MOTAMEDI: But, you know, I don't really have much choice because if I don't rebuild, I'm looking at a huge loss. Everyone that I've talked to whose house has been destroyed is planning to rebuild. No one is planning to leave.

McCHESNEY: And that could be a boon to developers, contractors, carpenters, plumbers, all kinds of workers needed for that task.

Alan Gin teaches economics at the University of San Diego and publishes a newsletter on the county's economy.

Professor ALAN GIN (Economics, University of San Diego, California): Due to the slump in the housing market locally here, we're down about 5,000 jobs in the construction sector compared to the same period last year.

McCHESNEY: But the one-off type of rebuild can be a problem for burned-out homeowners. Many - if not most of these homes - were built by developers capable of serious economies of scale by constructing hundreds of cookie-cutter homes all at once.

Some of the burned-out homeowners are underinsured and may find that rebuilding a single home will cost more than their insurance will pay. In some neighborhoods, there is another solution - bring in a single contractor to rebuild a number of homes.

Norm Miller is a real estate scholar at the University of San Diego.

Dr. NORM MILLER (Burnham-Moores Center for Real Estate, University of San Diego): And if you can actually get a community to agree to work with one or two homeowners and to come in and replace all of their homes they could save 10 or 20 percent on the cost by negotiating as a group and as much more efficient than they can do the community improvements at the same time and the community landscaping at the same time.

McCHESNEY: But Miller says many small contractors will benefit from those who choose to go it on their own.

Back in Rancho Bernardo, Khosro Motamedi says his neighborhood is going to meet next week.

Mr. MOTAMEDI: And that's basically going to be the topic, you know. Do we want to use a single contractor for the economy of scale or do we want to, you know, build individually?

McCHESNEY: Those agreements are very hard to come by but in some cases worked effectively after the last big fire of 2003. There are presently over 20,000 unsold homes in the San Diego inventory leading to sharply depressed prices. Now, people are going to need rentals over the next year or two, and many of those condos and houses will fulfill that need.

And many people burned-out may decide to take their insurance money and buy into that bargain market, but woe to the seller who's trying to sell a house in a burned zone. In an already depressed market, those sellers will have an uphill struggle.

John McChesney, NPR News, San Diego.

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